|WHAT WE’RE READING
Stuff we read this week that made us think.
A call for doctors to organize
Writing this week in the New Yorker, digital healthcare evangelist Dr. Eric Topol asks a provocative question: “Privately, doctors feel despair about their appalling working conditions and the deteriorating doctor-patient relationship. But there have been no marches on Washington, no picket lines, no social-media campaigns…Why aren’t doctors standing up for themselves and their patients?” Today the profession is fragmented and “balkanized” without a unifying voice or advocacy platform. The American Medical Association, which once represented three quarters of the nation’s doctors, now represents fewer than a quarter. More doctors identify with specialty societies, many of which, Topol points out, operate as trade guilds primarily focused on protecting the financial interests of their members. As a unified force, physicians could be powerful advocates for policies that promote patient health and financial security. It’s unclear whether Topol feels doctors should organize into a traditional labor union model to reassert control over change in practice—a move that’s rare among high-income, high-status professions, and tends to be a sign of the “industrialization” of the role (think of the parallel with airline pilots, who unionized as their jobs became more and more standardized). For maximum impact, any “union” of doctors must strike the balance between social and political advocacy and the inward-focused issues of practice—with patients as the guiding force for both.
The lucrative economics of Medicare Advantage
As we’ve repeatedly pointed out in our work, the future of Medicare is Medicare Advantage (MA). With more than a third of all seniors enrolled in private Medicare coverage already, and experts estimating that as many as 70 percent of Medicare beneficiaries will ultimately sign up for MA, it’s fair to say that we’re in the midst of a slow, steady privatization of the Medicare program. And not only is the Trump administration encouraging the growth of MA enrollment, but now leading Democrats running for President are proposing coverage expansions built around MA buy-in. Judging from a fascinating new report out from researchers at the Kaiser Family Foundation (KFF) this week, private insurers in the MA business must be licking their chops. Their analysis compares gross margins per covered person across commercial group, individual, and MA products. On average, between 2016 and 2018, an MA life was nearly twice as profitable (in absolute dollars) as a group market life, and more than twice as profitable as an individual market life. Although loss ratios are similar for all three books of business (about 85 percent), the fact that MA insurers pay providers rates similar to Medicare fee-for-service but continue to get subsidy-enhanced premium payments from the Federal government means the dollar value of an MA enrollee is much higher than for a commercial member. The upshot? Should Democrats run the tables in the 2020 election cycle, and move forward with plans for coverage expansion, we think the economics of MA expansion will ultimately keep insurers from fighting too hard against MA buy-in proposals. Insurers will be just fine under MA expansion—it’s the providers who will likely take the biggest hit under any Medicare coverage extension.
A challenge to Walmart’s credibility in healthcare
Retail giant Walmart’s complicated history with firearms was again in the news, after last weekend’s horrific mass shooting at a Walmart store in El Paso, TX. A piece in the Washington Post this week provides a useful review of how Walmart’s policies regarding the sale of guns in its stores has evolved over the past several years. Lagging other general merchandise retailers, Walmart stopped selling handguns only 26 years ago, facing concerns over rising gun violence. Given the Walton family’s affection for hunting and shooting sports, however, the chain has resisted calls to cease selling shotguns and rifles, although it did eliminate guns from two-thirds of its suburban-area stores in 2006 based on declining sales trends. However, facing stagnant sales in the wake of the 2009 recession, the retailer reintroduced guns in many of its stores, and has since seen gun sales spike in the wake of mass shootings and increased media attention on gun control issues. While sales figures are not yet available, it’s likely that, ironically, last week’s shootings at the El Paso Walmart store will again boost gun sales for the chain, as shoppers rush to purchase more weapons and ammunition in anticipation of any potential tightening of gun laws.
We believe gun violence is an urgent public health issue, and that more needs to be done to ensure that weapons don’t fall into the wrong hands. As Walmart continues to stake out a growing presence in the healthcare industry, with a massive pharmacy operation, a growing clinic business, and rumors of the potential acquisition of a health insurer, we’re disappointed that the retailer remains committed to selling firearms. Witness the bold (and economically risky) decision by CVS Health several years ago to stop selling tobacco products—a move the pharmacy chain felt necessary to credibly present itself to the public as a healthcare company. We hope Walmart will show similar courage in the months ahead. For now, however, the most the retail giant seems willing to do is remove store displays showcasing violent video games, a product that has repeatedly been shown to have little impact on the prevalence of real-world gun violence.